One of the biggest trends right now is couponing. There are some really savvy coupon users out there. They have detailed coupon organization systems and methods. They watch sales like a hawk and monitor store coupon policies. You occasionally hear stories where these shoppers can get an entire cart of groceries for pennies or even have the store owe them money!
This trend in my mind right now is filed under my first investor mindset rule: “Don’t invest in anything you don’t understand.” It doesn’t make sense to me how someone could save that much money from coupons! Clearly it is possible and I remember reading an interview with a woman who said, “If you don’t know how to use coupons, you’ve just never been poor enough.” but my own experience with coupons has been very different.
- I almost never receive a coupon for something that I regularly buy anyway. Our staples like milk, eggs, cheese, bread, produce, etc. usually don’t go on sale. The coupons I usually get are for new products or processed or frozen products that we don’t eat anyway.
- If I do get a coupon for something I actually buy, it is usually for a nominal amount like $0.30 and it usually says in small print something like “Limit one. Cannot be combined with other discounts.” There is something to be said for “A penny saved is a penny earned.” but I don’t get really excited about saving $0.30 on one purchase.
- The vast majority of coupons I receive aim to entice me to buy and get hooked on something that costs more than the cheaper alternative, like the store generic brand. So while I might save money this one time I am probably increasing my spending in the long term.
- The best coupons for me have been for online shopping sites. Before I checkout a cart of something I do a quick Google to see if there is a discount code for that store. It takes me less than a minute to find the code and I usually save a small amount like a few dollars or get free shipping. That is a good investment of time to me. But again, this is generally a small discount and not something huge like 50% off.
- Another good “coupon” has been the discounts associated with free grocery store membership cards. I don’t really view these as coupons but rather a penalty for those who don’t use the card.
I don’t see how I could get rich couponing and while you sometimes see coupon masters with garages full of stockpiled toothpaste or deodorant or freezers full of meat, in general, you don’t hear about the “Millionaire Couponer.” Why?
I think about another investing mindset rule that I have to remind myself of frequently:
Always remember the difference between
shopping and investing.
Now if you are on food stamps and you get a set amount of money for groceries every month and you can’t use that money for anything else, couponing makes a lot of sense. You can get more and perhaps better stuff for your grocery dollar. If you are not on food stamps, if you want to “make money” couponing you have to be saving more than you budgeted for groceries and then taking the savings and doing something productive with that savings. While most non-food-stamp couponers focus a lot of effort on the first part of the equation (saving money on groceries) rarely do people focus on the second part (doing something productive with the savings). If you spend all the savings you aren’t really “saving” anything. Our family has also found that you can also achieve grocery savings without coupons by trying to eat everything that you buy and waste as little as possible.
Another classic example of the shopping versus investing mindset is granite countertops. In the Washington area, right after the housing boom peaked and prices were starting to go down, you often heard realtors say, “If you want your house to sell, you must have granite countertops.” Anyone who has ever shopped for granite countertops knows that they are beautiful but also very expensive. So, I found it odd advice to tell a distressed homeowner that the best way to “make money” on their home is to spend more money on home improvements. Wouldn’t it be better advice to say: “You have the choice of either spending more money on home improvements to sustain this listing price or cutting your price significantly to reflect the fact that you don’t have these improvements.”?
Want one more example? In times of economic distress, you often see people encouraged to start their own businesses. This is exciting to a lot of people (as it should be!) but some would-be entrepreneurs get the formula wrong and treat their business more like a shopping project than a business. In our area, I have seen a lot of adorable small businesses come and go. The owners spent so much time and money renting a nice space, putting up a nice logo, new furniture, purchasing expensive inventory, etc. that they were really shopping more than they were investing. Inevitably, the business folds. All of the small business success stories I know of involve the business starting on an extremely modest, shoestring budget and growing through a large investment of hard work to become a main street storefront.
It’s easy in hindsight to identify the shopping versus investing problem but it is hard to know the difference when you are in the decision-making moment. For some reason, we all seem to remember the person who saved a lot of money or made a lot of money by purchasing something but we forget (or maybe don’t know about) the person who made a lot of money by not purchasing anything at all. I find it helpful to ask myself when I am tempted to shop myself out of a problem, “Am I using this situation as an excuse to buy something I have always wanted or is this really necessary?” “If I didn’t have this coupon, what would I buy?” “If I wasn’t trying to sell my house, would I install granite countertops?” “Is this something my business needs or something I am buying to make myself look better?”
As for me, I am still on the fence about coupons. I recently subscribed to a free coupon blog to see some examples of how couponing works. So far, I still haven’t seen any products on discount that we would buy anyway but I admire the skill that goes into finding the best bargains. I just secretly wonder what these couponers might be able to do if they put this much effort into learning the stock market and bought their stocks on sale as well as their groceries.
Are you a master couponer? What am I missing about couponing? What shopping versus investing problems have you faced? Please share in the comments.